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Tax Policy and U.S. Agriculture: A General Equilibrium Analysis

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  • Thomas W. Hertel
  • Marinos E. Tsigas

Abstract

This article emloys a computable general equilibrium model to analyze the effects of eliminating farm and food tax preferences in 1977. Tax differentials on capital income, labor payments, and production and sales taxes are each examined. Results indicate that these combined preferences lowered food costs by about $4.5 billion while enhancing after-tax returns to farm land, labor, and capital. The associated general equilibrium tax expenditure is estimated to have been between $5.5 and $6.6 billion.

Suggested Citation

  • Thomas W. Hertel & Marinos E. Tsigas, 1988. "Tax Policy and U.S. Agriculture: A General Equilibrium Analysis," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 70(2), pages 289-302.
    • Handle: RePEc:oup:ajagec:v:70:y:1988:i:2:p:289-302.
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    1. Xin Zhao & Dominique Y van der Mensbrugghe & Roman M. Keeney & Wallace E. Tyner, 2021. "Improving the Way Land Use Change is Handled in Economic Models," World Scientific Book Chapters, in: Peter Dixon & Joseph Francois & Dominique van der Mensbrugghe (ed.), POLICY ANALYSIS AND MODELING OF THE GLOBAL ECONOMY A Festschrift Celebrating Thomas Hertel, chapter 15, pages 467-515, World Scientific Publishing Co. Pte. Ltd..
    2. Briones, Roehlano M., 2016. "Embedding the AMPLE in a CGE Model to Analyze Intersectoral and Economy-Wide Policy Issues," Discussion Papers DP 2016-38, Philippine Institute for Development Studies.
    3. Hertel, Thomas W., 1991. "Applied General Equilibrium Analysis of Agricultural Policies," Staff Papers 200396, Purdue University, Department of Agricultural Economics.
    4. Grant J. Allan, 2015. "The Regional Economic Impacts of Biofuels: A Review of Multisectoral Modelling Techniques and Evaluation of Applications," Regional Studies, Taylor & Francis Journals, vol. 49(4), pages 615-643, April.
    5. Hertel, Thomas W. & Tyner, Wallace E. & Birur, Dileep K., 2008. "Biofuels for all? Understanding the Global Impacts of Multinational Mandates," Conference papers 331729, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    6. Jeong, Min-kook & Moon, Hanpil & Song, Woo-jin, 2017. "Impact Of Increased Imports Of Agricultural Products Due To Ftas On Domestic Price Decline," Journal of Rural Development/Nongchon-Gyeongje, Korea Rural Economic Institute, vol. 40(Special, ), December.
    7. Noel D. Uri & Roy Boyd, 1997. "The Effects of Reducing the Motor Fuels Excise Tax on Agriculture in the United States," Energy & Environment, , vol. 8(1), pages 45-63, March.
    8. Jiménez Giraldo, Dora Elena & Saldarriaga-Isaza, Adrián & Cicowiez, Martin, 2019. "Distributional and economy-wide effects of post-conflict policy in Colombia," Conference papers 333124, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    9. Swinton, Scott M. & Black, J. Roy, 2000. "Modeling Of Agricultural Systems," Staff Paper Series 11581, Michigan State University, Department of Agricultural, Food, and Resource Economics.
    10. Ngeleza, Guyslain K. & Muhammad, Andrew, 2008. "Preferential Trade Agreements between the Monetary Community of Central Africa and the European Union," Conference papers 331732, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    11. Hertel, Thomas, 2013. "Global Applied General Equilibrium Analysis Using the Global Trade Analysis Project Framework," Handbook of Computable General Equilibrium Modeling, in: Peter B. Dixon & Dale Jorgenson (ed.), Handbook of Computable General Equilibrium Modeling, edition 1, volume 1, chapter 0, pages 815-876, Elsevier.
    12. Kretschmer, Bettina & Peterson, Sonja, 2010. "Integrating bioenergy into computable general equilibrium models -- A survey," Energy Economics, Elsevier, vol. 32(3), pages 673-686, May.
    13. Everett B. Peterson & Paul V. Preckel & Thomas W. Hertel & Anya M. McGuirk, 1992. "Impacts of growth stimulants in the domestic livestock sector," Agribusiness, John Wiley & Sons, Ltd., vol. 8(4), pages 287-307.
    14. Robinson, Sherman & Kilkenny, Maureen & Hanson, Kenneth, 1990. "The USDA/ERS Computable General Equilibrium (CGE) Model of the United States," Staff Reports 278341, United States Department of Agriculture, Economic Research Service.
    15. Li, Liang & Taheripour, Farzad & Preckel, Paul V. & Tyner, Wallace E., 2012. "Improvement of GTAP Cropland Constant Elasticity of Transformation Nesting Structure," 2012 Annual Meeting, August 12-14, 2012, Seattle, Washington 124704, Agricultural and Applied Economics Association.
    16. Michael Leblanc & James Hrubovcak & Ron Durst, 1999. "Changing fiscal federalism in the United States: effects on agriculture and food consumption," Applied Economics, Taylor & Francis Journals, vol. 31(11), pages 1373-1382.
    17. Roxana Julia-Wise & Stephen C. Cooke & RDavid Holland, 2002. "A Computable General Equilibrium Analysis of a Property Tax Limitation Initiative in Idaho," Land Economics, University of Wisconsin Press, vol. 78(2), pages 207-227.
    18. Kai Ding & Filippo Rebessi, 2020. "Optimal Agricultural Policy: Small Gains?," Economic Inquiry, Western Economic Association International, vol. 58(4), pages 1907-1928, October.
    19. Beckman, Jayson & Gopinath, Munisamy & Tsigas, Marinos, 2017. "Production and Trade Impacts of Tax Reform," 2018 Allied Social Sciences Association (ASSA) Annual Meeting, January 5-7, 2018, Philadelphia, Pennsylvania 266295, Agricultural and Applied Economics Association.
    20. Kilkenny, Maureen, 1991. "Computable General Equilibrium Modeling of Agricultural Policies: Documentation of the 30-Sector FPGE GAMS Model of the United States," Staff Reports 278539, United States Department of Agriculture, Economic Research Service.

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